Perth: US oil fell below $44 a barrel on Monday, extending the previous session’s 1% decline, on worries the ailing US economy would further dent global growth and damage energy consumption.
Comments from Iran, the second-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC), that the producer group was unlikely to cut production again at a meeting this month added further downward pressure on prices.
US crude fell 88 cents to $43.88 by 0241 GMT. The contract snapped a three-day rally on Friday to settle down 46 cents at $44.76.
London Brent crude fell 80 cents to $45.55 a barrel.
“I’m sure that OPEC will take a very aggressive stance over the coming weeks. The sheer cost of $35-$45 a barrel of oil does not wash well with OPEC,” said Peter McGuire, Managing Director of Commodity Warrants Australia.
“But the great dilemma is the shrinking economies - everyone’s in a recession. It’s going to be a hard-fought out battle to see who gains supremacy,” he said.
Oil was dragged down by persistent worries about the US economy. Data on Friday showed the economy of the world’s largest energy consumer shrank by 6.2% in the fourth quarter from a year go, marking the deepest slide since 1982 and outpacing analyst forecasts for a 5.4% contraction.
Conflicting signals from some OPEC members on whether the group would reduce output at its 15 March meeting also encouraged the sell-off.
Algerian energy and mines minister Chakib Khelil said it was quite possible that OPEC would cut oil output at its next meeting scheduled for 15 March.
But Iran’s oil minister said he did not expect the OPEC to slash output again because an 80% commitment by the group to recent curbs had helped stem price falls, media reported on Sunday.
Oil prices have plunged by more than $100 a barrel since a peak of $147 last July as demand has tumbled amid a severe global economic slowdown. To shore up prices, OPEC pledged to cut output by a total of 4.2 million barrels per day (bpd) since September.
The US Department of Energy said on Friday that it hoped OPEC will consider the “global economic situation” when it reviews its output policy 15 March in Vienna.
In a sign that investors were becoming more bearish, there were more open interest positions at the $25 and $30 put options on the NYMEX April crude oil contract versus the previous week, Reuters data showed on Friday.
And crude oil speculators on the New York Mercantile Exchange cut net long positions in the week to Feb. 24, according to data from the US Commodity Futures Trading Commission.
The market will likely eye data, including US personal income and consumption and construction spending for January as well as the US February ISM manufacturing index, all due later in the day, for more clues on the health of the economy.